Government Plans To Make Crop Insurance Voluntary To All Farmers
Workers plant rice in a field. (Photographer: Namas Bhojani/Bloomberg)

Government Plans To Make Crop Insurance Voluntary To All Farmers

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The centre is planning to bring in some key changes to the Pradhan Mantri Fasal Bima Yojana, including making insurance voluntary to all farmers, a senior government official said. The changes also include removal of high premium crops, giving flexibility to states to provide customised add on products.

The agriculture ministry has also proposed setting up of State Level Corpus Fund, and migration of savings to a National-level Insurance Risk Pool to quell public perception that insurance companies are making profits from the scheme, the official said.

The suggestions also include a premium ceiling for coverage under the scheme at 25 percent (to be revised every year) if the irrigated area within a crop is more than 50 percent. A premium ceiling at 30 percent has been suggested if the irrigated area within a crop is less than 50 percent, the official added.

Launched in April 2016, PMFBY provides comprehensive crop insurance from pre-sowing to post-harvest period against non-preventable natural risks at extremely low premium rate of 2 percent for kharif crops, 1.5 percent for rabi crops and 5 percent for horticulture and commercial crops.

Among key changes, the ministry has suggested making the scheme voluntary to all farmers including loanee farmers. This has been done because compulsory enrolment of loanee farmers was leading to dissent, the official said.

"PMFBY is in the seventh season of implementation. Many challenges have been faced during the implementation of the scheme and the ministry has identified those gaps and proposed several changes and sought views of state governments on the same," the official told PTI.

The ministry has also proposed a two-step process of assessing crop yields required for calculating the extent of crop damage. First is elimination based on weather and other triggers, and the second step is Crop-Cutting Experiments in affected areas.

Also read: Fasal Bima Yojana: Will The Crop Insurance Scheme Survive In Modi-II?

Currently, plots for conducting CCEs are selected randomly leading to dissatisfaction among stakeholders.

The ministry has proposed migration to smart sampling and optimisation of CCEs in the short-run, and adoption of direct-yield estimation through technology for all major crops, the official said.

Since single product type does not suffice needs of all beneficiary farmers, the ministry has suggested a basic product be made available to all farmers with flexibility to states to provide customised add-on products to farmers.

To address the delay in payment of the state governments' share of subsidy, the official said the ministry has proposed deduction of overdue state subsidy from the central transfer to states.

The ministry has also proposed a three-year compulsory allocation of work to insurance companies by states to prevent repeated tendering processes that delay implementation of the scheme.

It has also suggested migration of crops having inconsistent yield data to weather-based insurance scheme.

Also read: India Announces Modest Hikes In MSP For All Kharif Crops In FY20

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